As inflation continues to climb and household expenses eat into savings, the aspiration to build a sizeable financial cushion has become nearly universal among the country’s working population. In this
climate of uncertainty, a seemingly neat formula has found wide acceptance in personal finance conversations, the so-called 15x15x15 SIP rule. Its appeal lies in its simplicity, which is, invest Rs 15,000 every month for 15 years and earn an annual return of 15%, and the result, many claim, will be a corpus of nearly Rs 1 crore.
On paper, the promise is tempting. But beneath this clean arithmetic lies a more complicated reality that investors often overlook.
The 15x15x15 rule rests on three assumptions. First, that an investor can consistently set aside Rs 15,000 every month. Second, that this discipline can be maintained uninterrupted for 15 years. Third, and most crucially, that the investment will deliver an average annual return of 15% throughout this period. While the first two depend largely on personal discipline and income stability, the third is entirely at the mercy of the market.
Mathematically, the numbers do add up. Over 15 years, a monthly SIP of Rs 15,000 amounts to a total investment of Rs 27 lakh. If the market indeed delivers a compounded annual return of 15%, the final value can hover around the Rs 1-crore mark. The trouble begins when this assumed return is treated as a certainty rather than a possibility.
Market data over long periods tells a sobering story. Equity mutual funds, even over extended time frames, have historically delivered average returns in the range of 11-13%. There have been years of exceptional performance, but sustaining a 15% return year after year for a decade and a half is rare. If returns settle closer to 12% instead of 15%, the final corpus drops sharply to roughly Rs 75 lakh. That missing Rs 25 lakh is not the result of poor investing, it is simply the cost of unrealistic expectations.
Some investors attempt to bridge this gap by taking on more risk. The logic is straightforward. If large-cap or diversified funds do not generate 15%, then mid-cap or small-cap funds might. In practice, this approach often backfires. Higher-risk funds are far more volatile, with long stretches of underperformance and sharp drawdowns. During such phases, many investors lose confidence, pause their SIPs, or shift funds at the wrong time. The discipline that SIPs depend on breaks down, and the likelihood of suboptimal returns increases.
Even if the Rs 1-crore target is achieved, another uncomfortable question remains unanswered, what will that money actually be worth? Inflation steadily erodes purchasing power. At an average inflation rate of 6%, Rs 1 crore after 15 years would have the present-day value of roughly Rs 42 lakh. Add taxes, rising healthcare costs, family responsibilities, and lifestyle changes, and the figure that once looked impressive may no longer feel adequate.
This does not mean the 15x15x15 rule is without merit. As a concept, it serves as an effective introduction to long-term investing and highlights the power of compounding through SIPs. It simplifies a complex subject and encourages people to begin their investment journey. The mistake lies in treating it as a complete financial plan rather than a starting point.
Sound financial planning requires more nuance. Returns should be estimated conservatively, inflation must be factored into future goals, and SIP amounts should ideally rise in tandem with income growth. Most importantly, investment strategies should be built around individual life goals, risk appetite, and financial responsibilities, not around a single formula.
